Short-Term Rental Apartments Face Rising Calls for Regulation

BARCELONA, Spain — In the neighborhoods of L’Eixample, Barcelona’s grid of wide tree-lined streets, a showdown is developing between hoteliers and apartment owners renting their homes to tourists.

After the collapse of the real estate business in Spain, the number of apartments in the city licensed for vacation rentals soared to 9,857 in 2014, from 2,349 at the end of 2010, according to Apartur, the association of tourist apartments in Barcelona. Many of the new landlords were investors who decided to rent when they could not find buyers, even though prices have been as much as 40 percent below the peak levels reached in 2007.

In May, at the urging of the hotel industry, the Barcelona city government announced a yearlong ban on issuing new licenses for rentals of fewer than 30 days, citing complaints about noise and trash left by the tourists. Hoteliers have argued that the landlords should be required to follow the same tax, security and health standards as hotels.

Caught in the middle are owners such as Fidel Peral Peláez, who rents his two-bedroom, top-floor apartment in L’Eixample to tourists for 149 euros, or $200, a night or €999 a week. “People like me with one or two apartments, we don’t compete with the big hotels,” he said.

Until 2008 Mr. Peláez rented the apartment on a long-term basis, but he switched to short-term rentals because they allow him to charge higher rents and to avoid the legal hurdles of dealing with long-term tenants. Under Spanish law, it can be difficult to evict tenants, even if they are not paying rent.

“It is a better business to rent to tourists,” Mr. Peláez said.

The conflict over short-term rentals has been escalating in cities around the world, thanks in large part to the growth of Internet services such as HomeAway and Airbnb, which make it easy for landlords to connect to people looking for a vacation home.

In locations including Panama City, Dubai, Berlin and Madrid, government agencies have moved in recent months to regulate the industry.

“The Internet has opened up the market so much that now there has to be some kind of regulation,” said Carlos Villaro Lassen, secretary general of the European Holiday Home Association, a group formed by vacation rental companies in 2013 to lobby for the industry. “The problem for regulators is they can’t stop the market, and they can’t stop people who want to rent.”

In Berlin, neighborhood groups have complained that the apartments catering to short-term tourists have reduced the supply of available apartments and driven up rents. Last year, Berlin approved a law prohibiting owners from renting their apartments for less than two months.

“Neighborhoods are changing and people here have a problem with the fast transition,” said Claudia Dünckmann, coordinator of Apartment Allianz Berlin, a group formed to represent landlords.

She disputes accusations that the short-term rentals have had an effect on the long-term rental market in Berlin. According to a 2012 government study, there are 8,900 vacation rentals in the city, which has two million apartments. “It isn’t possible that this number of flats has an impact on the market,” Ms. Dünckmann said.

In Dubai, plans to regulate short-term rentals drew mixed reactions from the property industry. Government agencies have yet to release detailed regulations, but the government has emphasized the need to maintain a pool of apartments for tourist rentals, in part to support the emirate’s announced goal of accommodating 20 million annual visitors by 2020, double the current visitor traffic.

“It has to be licensed to ensure the level of service is kept high,” said Mario Volpi, managing director of Prestige Real Estate, a property agency in Dubai.

In New York and Paris, government agencies have been trying to restrict the market for years, with mixed results. New York State, for example, subpoenaed information from Airbnb, looking for landlords using the site who may be renting their apartments illegally.

Despite restrictions, the number of listings for rentals in New York and Paris on HomeAway has grown in recent years, said HomeAway’s chief strategy officer, Carl Shepherd. HomeAway favors regulations that treat short-term rentals in the same way as long-term ones, he said.

“Overly restrictive laws or bans are akin to the U.S.’s Prohibition era in the 1930s,” he said. “They are ineffective and drive the activity underground, which is clearly detrimental to all.”

In Spain, the issue is complicated by the economic situation. Unemployment continues to exceed 25 percent, and home prices are still dropping in some areas. Short-term rentals are one of the country’s few growth industries.

“It has become a source of income for many people,” said Janu Sauramo, owner of Flat Barcelona, a small agency that handles apartment rentals. “It has become a way to survive.”

Barcelona officials say they will take several months to debate regulations on the industry. One proposal would limit short-term rentals to buildings where the majority of the apartments are used for vacation rentals.

“We don’t want everyone with an empty flat to convert it into a holiday rental,” a city official, Sònia Recasens, told the local news media. “We have to professionalize the sector.”

In July, the confrontation took a new twist, when the government of the Catalonian region, which includes Barcelona, fined Airbnb €30,000, charging the site with advertising illegal rentals. In a statement, Airbnb said it would “continue to provide robust information about the rules in Barcelona, and require all Airbnb hosts to follow those rules.”

The hotel industry argues it is a question of “fair play,” said Manel Casals Saborit, general director of the Barcelona Hotels Association. The “amateur” landlords, as he described them, should have to meet the same standards as any professional accommodations, Mr. Casals said. Many apartment clients find “deficiencies that can be dangerous for their own health and security,” he wrote in an email.

But restrictions or even a ban would not stop the short-term rentals, Barcelona landlords say.

“Most people want to do things legally if given the opportunity,” said Pablo Zubicaray, president of Friendly Rentals, a Barcelona agency focused on short-term rentals. “We want regulation, but we want regulations we can comply with.”

Correction:

An earlier version of this article misstated the action taken by New York State against the apartment-sharing service Airbnb. The attorney general subpoenaed information from the company; he did not sue the company.